41. Provisional refund.

(1)     Notwithstanding anything contained in section 40, in the  case of a dealer, whose main business is to sell goods in the course of the export of the goods out of the territory of India, the assessing authority, upon receiving the return for a tax period and application for provisional refund along with the proof of export, pending audit and investigation to establish the correctness of the claim and consequent assessment, shall, allow provisional refund of the excess amount of input tax credit for such tax period on account of sale in the course of the export of the goods out of the territory of India, within thirty days from the date of receipt of such application:
         Provided that if any amount of tax, fee or penalty or any other amount either under this Act or under the Central Sales Tax Act, 1956 or under the erstwhile Act is due against such dealer  the amount found refundable first shall be adjusted towards such amount of tax or fee or penalty, as the case may be, and excess, if any, shall be refunded to the dealer:
         Provided further that, before granting refund, the assessing authority may require the dealer to furnish security of amount equivalent to amount of refund to its satisfaction where,-
(a) the dealer has been involved in  tax evasion under this Act or erstwhile Act or under  the Central Sales Tax Act 1956; or
(b)  the dealer has obstructed or  prevented  the officers  empowered   under this Act  in performing  any of his functions or duties assigned to him under this Act; or
(c) the dealer has misused in any way the declaration or the certificate prescribed under this Act or under the Central Sales Tax  Act, 1956 or under the erstwhile Act or under the Uttar Pradesh Tax on the Entry of Goods into Local Areas Act, 2007;or
(d) the dealer is defaulter of the payment of tax on the sale or purchase   of goods under this Act or under the Central Sales Tax Act, 1956 or under the erstwhile Act; or
(e)  the dealer has violated any provision of   this Act resulting in the loss of revenue.

Explanation-   For the purposes of this section,-
(i) main business of export in relation to a dealer shall mean the dealer whose aggregate of turnover of sales in the course of export of goods outside the territory of India under sub-sections (1) and (3) of section 5 of the Central Sales Tax Act, 1956, for any tax period exceeds fifty percent of the aggregate of turnover of sale of all goods- 
(a) within the State;
(b) in the course of export of goods out of the territory of India; and
(c) in the course of inter-State trade or commerce.     
(ii) where any application is incomplete the date of completion of  that application shall be deemed to be the date of application.

(2)   If, on assessment, the provisional refund granted under sub-section (1) is found to be in excess, then the excess amount of refund shall be recovered from the dealer along with interest at the rate of fifteen percent per annum and for the period commencing on the date of provisional refund and ending with the date of payment of the amount, as tax due from the dealer.

(3)   If the application is not in order or contains wrong particulars it shall be rejected by a speaking order in writing  and the dealer shall be informed accordingly:
            Provided that no application shall be rejected without affording the dealer an opportunity of being heard .

(4)    Notwithstanding any thing contained in the first proviso to sub-section (1)  where any industrial unit has been declared sick by any competent court or authority constituted under any law for the time being in force, the provisional refund under this section shall be allowed if such industrial unit satisfied that,-
(a)  the package for rehabilitation of the sick unit has been approved by a competent court or an authority;
(b) the State Government has deferred the arrear against such unit  under section 71  and
(c)  the conditions imposed by the State Government for deferment of the arrear has been complied with.